2. Terrell Corp. management is considering purchasing a machine that will cost $117,250 and will be depreciated on a straight-line basis over a five-year period. The sales and expenses (excluding depreciation) for the next five years are shown in the following table. The companys tax rate is 34 percent. Terrell will accept all projects that provide an accounting rate of return (ARR) of at least 45 percent. Should the company accept the project?

	Year 1	Year 2	Year 3	Year 4	Year 5
Sales	$123,450	$176,875	$242,455	$255,440	$267,125
Expenses	137,410	126,488	141,289	143,112	133,556
Depreciation	23,450	23,450	23,450	23,450	23,450
EBIT	$ (37,410)	$ 26,937	$ 77,716	$ 88,878	$110,119
Taxes (34%)	12,719	9,159	26,423	30,219	37,440
Net Income	$ (24,691)	$ 17,778	$ 51,293	$ 58,659	$ 72,679
Beginning Book Value	117,250	93,800	70,350	46,900	23,450
Less: Depreciation	(23,450)	(23,450)	(23,450)	(23,450)	(23,450)
Ending Book Value	$ 93,800	$ 70,350	$ 46,900	$ 23,450	$ 0

Average net income =

Average book value =